Co-operation between competition authorities

31 August 2004

Christophe Fichet

Regulation 1/2003 (“the Regulation”),[1] which sets up new rules for the implementation of Articles 81 and 82 of the Treaty, provides that both the national Commission and the national competition authorities of the Member States (“NCAs”) must apply the Community competition rules in close cooperation. To that end, the Commission has published a notice[2] (the “Notice”) specifying the principles applicable to this co-operation and establishing in particular the European Competition Network (the “ECN”). The ECN, which includes the European Commission and the NCAs, aims at being a “forum for discussion and co-operation in the application and enforcement of EC competition policy”.

In particular, the Notice provides for a division of work and rules regarding the exchange and use of information collected, including in the context of a leniency program, as well as principles for a consistent application of the EC competition rules.

Division of work

As the members of the ECN can now implement all the provisions of Articles 81 and 82, separately or together by acting in parallel, an optimal division of the work is required. The Commission has, therefore, adopted the criteria of the “well placed authority” to deal with a case. An authority is considered to be well placed to adjudicate a case when three cumulative conditions are met: (i) the agreement or practice has substantial direct actual or foreseeable effects on competition within its territory or is implemented within or originates from its territory; (ii) the authority is able to effectively bring to an end the entire infringement, i.e., it can adopt a cease-and-desist order or has adequate sanction powers; and (iii) it can gather, possibly with the assistance of other authorities, the evidence required to prove the infringement.

Under this principle, the authority that receives a complaint or starts an ex-officio procedure is expected to be the best placed authority to deal with the case. However a re-allocation of the case may occur when the authority that received the complaint considers it is not well placed to act or where other authorities also consider themselves to be well or even better placed to act.

Mechanisms of cooperation for the purposes of case allocation and assistance

In order to avoid multiple similar procedures, the Notice provides[3] that any NCA acting under Article 81 or Article 82 must inform the ECN of this before or just after commencing its first formal investigative measure. Such information opens a two-month period during which the case can be re-allocated to a well placed authority.

In case of re-allocation of a case, the undertakings concerned are informed as soon as possible. However, the undertaking(s) involved in or affected[4] by an infringement have no rights to force the case to be dealt with by a particular authority. Moreover, under Article 13 of the Regulation, an NCA may then suspend[5] or close its proceedings, provided however that the agreement or practice concerned involves the same infringement(s) on the same relevant geographic and product markets.

It must be noted however that the Notice does not deal with the case where a complainant has filed an application for interim measures. By reference to both paragraph 80 of the Notice on the handling of complaints by the Commission under Articles 81 and 82 of the EC Treaty[6] and to the procedure of re-allocation described above, one might infer that interim measures should be handled by the NCA to which the application has been filed, while the Commission could retain jurisdiction on the merits even in case of re-allocation of the case. However, such interpretation will remain subject to further case law.

In order to reinforce the co-operation within the ECN, the Notice also provides that the Commission or an NCA may request assistance from another NCA in order to collect information on its behalf or to carry out fact-finding measures on its behalf. The exchange and use of information in this context are governed by Article 12 of the Regulation.

Exchange and use of information

Article 12 of the Regulation provides that “for the purpose of applying Articles 81 and 82 of the Treaty the Commission and the competition authorities of the Member States shall have the power to provide one another with and use in evidence any matter of fact or of law, including confidential information”.

However, the Notice provides specific safeguards for undertakings and individuals. Regarding confidential information, the Notice refers to the concept of “professional secrecy” as specified and protected by Article 28(2) of the Regulation. Moreover, the Commission specifies that the information exchanged can only be used in evidence for the application of Articles 81 and 82 and for the subject matter for which it has been collected. Regarding protection of individuals, the Notice provides, in accordance with Article 12(3), that “information exchanged within the Network may not be used to impose sanctions on individuals, unless the laws of the transmitting and the receiving authorities provide for sanctions of a similar kind in respect of individuals in case of violation of Articles 81 and 82, or if the rights of the individual concerned as regards the collection of evidence have been respected by the transmitting authority to the same standard as they are guaranteed by the receiving authority”.

Co-ordination in the case of applications for leniency

Safeguards are also provided by the Commission in the case of exchange of information in the context of application(s) filed by a participant in a cartel for leniency.

Information exchanged within the ECN in such a context must not be used by other members of the ECN, including those whose national legislation does not provide for a leniency program[7], as the basis for starting an investigation on their own behalf, whether under the competition rules of the Treaty or, in the case of NCAs, under their national competition law or other laws.

Moreover, except for specific limited cases provided in paragraph 41 of the Notice, any exchange within the ECN of information collected from the applicant for leniency or following an inspection or any other fact-finding measures, requires the prior consent of the applicant.

In order to bind the members of the ECN to these rules, although the Regulation does not include any provision relating to leniency programs, the Notice (whose provisions would otherwise only remain recommendations) provides that the information relating to cases initiated as a result of a leniency application will only be made available to “those NCAs that have committed themselves to respecting the principles set out in the Notice”. To this effect, a specific declaration must be signed by the NCAs.

Consistent application of the EC competition rules

In order to give the Commission the power to ensure a consistent application of the EC competition rules, the Notice refers to Articles 11(4) and 11(6) of the Regulation.

Under Article 11(4) of the Regulation, an NCA must inform the Commission (and may share this information with the other members of the ECN) no later than 30 days before adopting a decision applying Articles 81 or 82 of the Treaty which requires an infringement to be brought to an end, accepts commitments or withdraws the benefit of a block exemption. Article 11(6) of the Regulation, states that the initiation by the Commission of proceedings for the adoption of a decision under the Regulation relieves all NCAs of their competence to apply Articles 81 and 82[8]. In practice, the Commission can pre-empt a case on the basis of article 11(6) when:

1) the Commission is the first competition authority to initiate proceedings in a case for the adoption of a decision under the Regulation. NCAs can then no longer deal with the case; or

2) one or more NCAs inform(s) the ECN that it (they) are dealing with a case on the basis of Article 81 or 82 of the Treaty and the Commission initiates proceedings during the initial two month allocation period.

Beyond the allocation period, the Commission will only apply Article 11(6) where one of the following situations occurs: (a) ECN members envisage conflicting decisions in the same case, (b) ECN members envisage a decision which is obviously in conflict with consolidated case law; (c) ECN member(s) is (are) unduly drawing out proceedings in the case; (d) there is a need to adopt a Commission decision to develop Community competition policy; or (e) the NCA(s) concerned do not object.

The Notice aims to ensure a consistent application of the EC competition rules by the best placed authority and for ensuring co-operation between the members of the ECN. We will have to wait and see how this works in practice.

[1] Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty - Official Journal L 1, 04.01.2003, pages 1-25.

[2] Commission Notice on cooperation within the Network of Competition Authorities - Official Journal C 101, 27.04.2004, pages 43-53. This notice replaces the Commission notice on cooperation between national competition authorities and the Commission in handling cases falling within the scope of Articles 81 and 82 of the Treaty published on October 15, 1997.

[3] On the basis of Article 11(3) of the Regulation 1/ 2003.

[4] The Notice specifies that the rights of complainants who lodge a complaint with an NCA are governed by the applicable national law.

[5] Paragraph 22 of the Notice provides however that “An authority may be unwilling to close a case before the outcome of another authority’s proceedings is clear. The ability to suspend its proceedings allows the authority to retain its ability to decide at a later point whether or not to terminate its proceedings. Such flexibility also facilitates consistent application of the rules”.

[6] Paragraph 80 of the Notice on the handling of complaints by the Commission under Articles 81 and 82 of the EC Treaty provides that “interim measures cannot be applied for by complainants under Article 7(2) of Regulation 1/2003” and specifies that “requests for interim measures by undertakings can be brought before Member States' courts which are well placed to decide on such measures” and makes reference, in a footnote, to the fact that “depending on the case, Member States' competition authorities may equally be well placed to adopt interim measures”.

[7] These NCAs will have however to comply with the rules and guarantees provided by the Notice by signing a specific declaration (please refer above).

[8] If an NCA is already acting on a case, the Commission will explain the reasons for the application of Article 11(6) of the Regulation in writing to the NCA concerned and to the other members of the ECN.